Division of Revenue Bill (B19-1999); Public Finance Management Amendment Bill (B27-1999); Public Investment Commissioners Amend

FINANCE SELECT COMMITTEE
15 March 1999
DIVISION OF REVENUE BILL (B19 OF 1999); PUBLIC FINANCE
MANAGEMENT AMENDMENT BILL (B27 OF 1999); PUBLIC INVESTMENT
COMMISSIONERS AMENDMENT BILL (B8 OF 1999)

Present: Delegates from the Provinces, excluding representation from the
Western Cape. Guests: Howard Veal (legal advisor, Public Investment
Commission - PIC), Dean Botha and Ismail Momoniat (Department of Finance -
DoF), Murphy Morobe (Financial and Fiscal Commission - FFC).

SUMMARY

The session took place under time constraints, since a number of members had to attend another meeting at noon. No issues were discussed in depth. The meeting served to finalise the committees deliberations on three pieces of legislation. All three bills were adopted without amendment and supported by all the provinces except the Western cape which was not represented.

MINUTES
1) B19 of 1999 (section 76): The Chairperson, Mr Fenyane, read the motion of
desirability. This was followed by a brief discussion of how the bill
should best be debated, clause-by-clause or province-by-province. Members
resolved to pursue the latter strategy. Ms J Fubbs, representing Gauteng,
requested that the DoF representatives reply to questions raised at a
previous meeting. A main concern was that the bill does not ensure that
provinces are compensated for administrating grants from the national
sphere. Ismail Momoniat replied that in most cases, such grants did not
require additional infrastructure, and stated his opinion that the
provisions of the bill were sufficient. Mr Momoniat further noted that such
concerns should be raised in the budget process itself, which provided
ample opportunity for the expression of provincial concerns, and not at
such a late, i.e. the parliamentary, stage. The committee report was read,
and the bill was adopted without amendment with the support of all
provinces excluding the Western Cape, which was not represented. Several
members pointed out that spelling errors would still have to be cleaned up,
and the DoF representatives assured that this would be done.

2) B27 of 1999 (section 76): The Chairperson, Mr Fenyane, read the motion of
desirability. Provinces were asked for their mandates. Again, Ms Fubbs
pointed out that a response by the DoF was still outstanding on several
issues. These included whether the prohibition of provincial commitments in
foreign currency could be circumvented (section 38), whether the
prohibition of unfunded mandates could also be applied in retrospect
(section 17), and whether legislatures were wrongly treated as if they were
departments. Mr Momoniat replied that the provision of provincial
commitments in foreign currency was sufficiently stringent. He was not at
ease with the term "unfunded mandates" in the first instance, but stated
that the clause could not be applied to legislation already in place due
to the administrative chaos this would cause. The role of unique status of
legislatures was recognised, he claimed. He also noted that spelling errors
would be fixed at a later stage, and would not affect the substance of the
bill. All present provinces supported the bill. The report was read,
indicating that the bill was adopted without amendments.

3) B8 of 1999 (section 75): Mr Veal provided a brief overview of the bill.
The purpose of the bill is to amend the Public Investment Commissioners Act
(No. 45 of 1984). The amendment would enable commissioners to make
investments which promote social responsibility or infrastructure
development. However, any amounts invested in such a way may not exceed 3,5
per cent of the value of the assets. Delegates raised the following issues:
What defines "social responsibility"? Is this not a carte blanche term? Mr
Veal replied that the courts would be relied upon to develop an objective
test should the need arise. Dr. Gouws (Freedom Front) complained that the
provision had the sole purpose to create "a fund outside normal budget
structures". He was joined by a delegate from KZN, who asked whether the
objective of such investment was a social or a financial return. Mr Veal
answered that one was still dealing with an investment fund, which by
definition required a financial return. However, the amendment would
guarantee a greater balance between social responsibility and financial
return. The motion of desirability was read, and, despite the concerns that
were raised, all parties supported the bill.

With regard to the Appropriation Bill (B18 of 1999), which had only been
tabled in the National Assembly, the committee decided to report that it
concluded its deliberations on the bill.